European Commission Fines Samsung, LG, Philips, Others € 1.47 Billion

The European Commission has fined seven international groups of companies a total of € 1,470,515,000 for participating in either one or both of two distinct cartels in the sector of cathode ray tubes ("CRT"). For almost ten years, between 1996 and 2006, these companies fixed prices, shared markets, allocated customers between themselves and restricted their output.

One cartel concerned colour picture tubes used for televisions and the other one colour display tubes used in computer monitors. The cartels operated worldwide. The infringements found by the Commission therefore cover the entire European Economic Area (EEA). Chunghwa, LG Electronics, Philips and Samsung SDI participated in both cartels, while Panasonic, Toshiba, MTPD (currently a Panasonic subsidiary) and Technicolor (formerly Thomson) participated only in the cartel for television tubes. Chunghwa received full immunity from fines under the Commission's 2006 Leniency Notice for the two cartels, as it was the first to reveal their existence to the Commission. Other companies received reductions of their fines for their cooperation in the investigation under the Commission's leniency programme.

Commission Vice President in charge of competition policy Joaquín Almunia said: "These cartels for cathode ray tubes are 'textbook cartels': they feature all the worst kinds of anticompetitive behaviour that are strictly forbidden to companies doing business in Europe. Cathode ray tubes were a very important component in the making of television and computer screens. They accounted for 50 to 70% of the price of a screen. This gives an indication of the serious harm this illegal behaviour has caused both to television and computer screen producers in the EEA, and ultimately the harm it caused to the European consumers over the years".

The two CRT cartels are among the most organised cartels that the Commission has investigated. For almost 10 years, the cartelists carried out the most harmful anti-competitive practices including price fixing, market sharing, customer allocation, capacity and output coordination and exchanges of commercial sensitive information. The cartelists also monitored the implementation, including auditing compliance with the capacity restrictions by plant visits in the case of the computer monitor tubes cartel.

Top management level meetings, dubbed "green(s) meetings" by the cartelists themselves because they were often followed by a golf game, designed the orientations for the two cartels. Preparation and implementation were carried out through lower level meetings, often referred to as "glass meetings", on a quarterly, monthly, sometimes even weekly basis. Meetings were held in various locations in Asia (Taiwan, Korea, Japan, Malaysia, Indonesia, Thailand, Hong Kong, etc.) and Europe (Amsterdam, Budapest, Glasgow, Paris, Rome). The cartels operated worldwide.

Multilateral meetings usually started with a review of demand, production, sales and capacity in the main sales areas, including Europe; then prices were discussed, including for individual customers, i.e. TV and computer manufacturers. They had therefore a direct impact on customers in the European Economic Area (EEA), ultimately harming final consumers. The cartelists were trying to address the decline of the CRT market in a collusive way, to the detriment of consumers. For example, one document recording the cartel discussions spells out clearly: "producers need to avoid price competition through controlling their production capacity".

The investigation also revealed that the companies were well aware they were breaking the law. For instance, in a document found during the Commission's inspections, a warning goes as follows: "Everybody is requested to keep it as secret as it would be serious damage if it is open to customers or European Commission". The participants were therefore taking precautions to avoid being in possession of anticompetitive documents. Some documents spelled out, for example: "Please dispose the following document after reading it".

In setting the level of fines, the Commission took into account the companies' sales of the products concerned in the EEA, the very serious nature of the infringement, its geographic scope, its implementation and its duration. If Chunghwa had not received full immunity, its fines would have been € 8 385 000 for the TV tubes cartel and € 8 594 000 for the computer monitor tubes cartel. Samsung SDI, Philips and Technicolor received reductions of fines ranging from 10 to 40% for their cooperation under the Commission's leniency programme. The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the respective cartels. One of the companies invoked its inability to pay the fine. The Commission assessed this claim under point 35 of the 2006 fines Guidelines and granted a reduction of the fine.

I guess the thought never dawned on them that demand was falling for CRTs so the supply chain squeezed to compensate. The fact most of those fined have a large pressence in the LCD market (technology that replaced CRT) shows how baseless this is. Low end LCDs, despite costing less in terms of labor and materials, still cost about the same as low-end CRTs in the years cited (1996-2006) further making this look like a witch hunt.

No matter, EU milking corporations for cash is not news--it's fast becoming tradition. I'm just waiting for a company to flip the bird at the EU, refuse to pay the fine, and leave the market.

I guess the thought never dawned on them that demand was falling for CRTs so the supply chain squeezed to compensate. The fact most of those fined have a large pressence in the LCD market (technology that replaced CRT) shows how baseless this is. Low end LCDs, despite costing less in terms of labor and materials, still cost about the same as low-end CRTs in the years cited (1996-2006) further making this look like a witch hunt.

No matter, EU milking corporations for cash is not news--it's fast becoming tradition. I'm just waiting for a company to flip the bird at the EU, refuse to pay the fine, and leave the market.

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I'm totally fine with the fine if they were cartels. You as an american should hate cartels too.

You put cartel leaders in prison for a long time, not fine them. The problem with that is the EU can't jail someone that the EU can't convict of a crime so they fine them instead. This makes the EU no better than the corporations they fine. To me, it's no different the school bully demanding kids give them their lunch money.

You put cartel leaders in prison for a long time, not fine them. The problem with that is the EU can't jail someone that the EU can't convict of a crime so they fine them instead. This makes the EU no better than the corporations they fine. To me, it's no different the school bully demanding kids give them their lunch money.

You put cartel leaders in prison for a long time, not fine them. The problem with that is the EU can't jail someone that the EU can't convict of a crime so they fine them instead. This makes the EU no better than the corporations they fine. To me, it's no different the school bully demanding kids give them their lunch money.

Take the accused to court and have a jury determine their punishment assuming they are convicted. If a fine is leveed, it needs to go to those that were affected by the criminal act, not EU treasury.

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While that in particular would be kinda hard, anything would be better than the treasury. That goes right into politicians pockets.

At least in America it does. I was in the military and two years ago, and when the US Gov't couldn't agree on a bill, we had a spending halt. I was not going to receive my measly 40,000/yr paycheck mid-month. Guess who was still getting paid though? Everyone else in government who were making leaps and bounds more than me.

I'm surprised anyone is sticking up for the companies here, just about every component maker of the computer industry has been busted, (by European and American regulators)and some have been busted more than once like the memory makers.

Actually this isnt the first strike against monitor makers, they got busted price fixing LCDS as well a few years back.

When companies collude, consumers pay more and have less choice and its bad for capitalism. Fine them harder I say.

Can the EU fine other countries? Is OPEC a corporation? OPEC may be a "cartel" but is no different to NATO (especially NATO during the Cold War). In the same way as NATO had a "monopoly" of force in the West, OPEC has a "monopoly" of oil. The only difference is that that force is not sold, but can be projected. And that oil is sold, but you can't just "project" your oil to other countries.

Can the EU fine other countries? Is OPEC a corporation? OPEC may be a "cartel" but is no different to NATO (especially NATO during the Cold War). In the same way as NATO had a "monopoly" of force in the West, OPEC has a "monopoly" of oil. The only difference is that that force is not sold, but can be projected. And that oil is sold, but you can't just "project" your oil to other countries.

Before saying ignorant things like that MM, you should try answering much more important questions first like the two I asked above.

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OPEC has more then a few corporations that distribute the oil. EU could go after any number of them. They don't.

OPEC has more then a few corporations that distribute the oil. EU could go after any number of them. They don't.

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I'm sorry, but that's just silly. Since OECD and former USSR countries started extracting more oil, OPEC lost it's ability to control oil prices. OPEC hasn't had that much influence on the oil market in the past 10 years. The EU should have went after OPEC in 1973 if anything.
And just to make it clear, OPEC is an intergovernmental organization.
Corporations doing business in Europe... are a different thing. If they go against EU regulation, the European Commission will fine them, and they have a good track record for protecting EU citizen consumer rights. And the EU has a lot tougher regulation than most other markets, but it's also the biggest developed consumer market in the world.
And those saying that the EU is biased in this decision, Philips is a Dutch corporation and it has the second highest fine.